Merkel centre-right hopes under threat before vote

Tue Sep 22, 2009 11:17am EDT

By Madeline Chambers and Paul Carrel

BERLIN (Reuters) – Chancellor Angela Merkel’s lead in the polls is narrowing days before a federal election, suggesting she could be forced into another “grand coalition” that might struggle to lift Germany out of a deep downturn.

Merkel wants to avoid a re-run of the right-left partnership with the Social Democrats (SPD) that has ruled Germany for the past four years, arguing that it would be less stable and could fail to agree on the policies Europe’s largest economy needs.

Instead, she wants to team up with the business-friendly Free Democrats (FDP) in a center-right coalition that would pursue tax relief and rein in the role of the state.

A Reuters poll of fund managers and economists on Tuesday showed that tax relief and banking sector reform are at the top of their wish list for the next government to tackle.

The survey also showed that while most respondents believe a center-right government would be best for the German economy, the majority expect another grand coalition.

Pollsters are hedging their bets on which coalition will end up in power. A Forsa poll showed Merkel’s conservatives with a wafer-thin lead which would just enable her to reach her goal.

“Nothing is guaranteed,” Forsa head Manfred Guellner told Reuters. “The conservatives are getting weaker and the SPD are drawing on their reserves and mobilizing their voters a bit.”

His poll gave the conservatives a 10-point lead over the SPD, virtually assuring Merkel of winning a second term. But the center-right parties are just one percentage point ahead of the combined total for the other three main parties, raising the specter of another “grand coalition.”

“OVERHANG” BOOST FOR MERKEL

If the final result is tight, Merkel may gain from a quirk in the electoral system which could hand her conservative bloc — the Christian Democrats (CDU) and Bavarian Christian Social Union (CSU) — up to 20 so-called “overhang” seats.

These seats result because each voter in Germany casts two ballots — one directly for a candidate in his or her constituency and the second for a party.

If a party wins more direct seats than it would theoretically get according to the percentage of second votes, the Bundestag lower house creates extra seats. In the past, such seats have played only a minor role.

“The overhang seats could be decisive,” Guellner said.

Merkel’s main rival, SPD chancellor candidate Frank-Walter Steinmeier, has taken heart from the recent gains and hopes his party can repeat the late comebacks it staged in 2002 and 2005.

However, Steinmeier’s coalition options are limited and the best he can probably hope for is to return as foreign minister under Merkel, with the SPD as junior partner, a scenario he signaled on Tuesday he could live with.

He has ruled out a partnership with the Left party due to major policy differences and personality clashes. The Left includes former communists and wants to pull German troops out of Afghanistan immediately.

Steinmeier’s hopes of forming a three-way partnership with the Greens and FDP, seemingly his only chance of snatching the chancellor post from Merkel, suffered a blow this weekend when the FDP ruled out such a deal.